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Trade analysis and tips for trading the Japanese yen
The price test at 141.93 occurred when the MACD indicator significantly dropped below the zero mark, which limited the pair's downward potential. For this reason, I chose not to sell the dollar. Considering the indicator was in the oversold area and 141.93 coincided with the weekly low, a decision was made to buy, anticipating a minor correction of the pair without waiting for a retest of that price. As a result, the rise was about 80 points. We have important statistics ahead, including the service sector activity index in the US and the composite PMI index, which encompasses manufacturing activity. If the statistics are poor, the pressure on the US dollar will increase significantly again, leading to another drop in the USD/JPY pair and setting a new weekly and monthly low. Strong statistics will limit the downward potential of the pair and give a chance for another rise within the channel. Regarding the intraday strategy, I plan to act based on the implementation of scenarios #1 and #2.
Buy signal
Scenario #1: Today, I plan to buy USD/JPY upon reaching the entry point around 143.34 (green line on the chart) to rise to 144.89 (thicker green line). At 144.89, I will exit from buying and open sales in the opposite direction (anticipating a movement of 30-35 points from the entry point). A strong rise in the pair today can only be expected in the case of very weak ISM data. Important! Before buying, ensure the MACD indicator is above the zero mark and starting to rise from there.
Scenario #2: I also plan to buy USD/JPY today if the price at 142.47 is tested twice consecutively when the MACD indicator is in the oversold area. This will limit the pair's downward potential and lead to a market reversal upwards. An increase to the opposite levels of 143.34 and 144.89 can be expected.
Sell signal
Scenario #1: I plan to sell USD/JPY today after updating the level of 142.47 (red line on the chart), leading to a rapid decline in the pair. The key target for sellers will be the level of 140.89. I will exit from selling and immediately open buying in the opposite direction (anticipating a movement of 20-25 points in the opposite direction from the level). Pressure on the pair will return in case of a failed attempt to break above 143.34 and weak US statistics. Important! Before selling, ensure that the MACD indicator is below the zero mark and that it is just starting to decline from there.
Scenario #2: I also plan to sell USD/JPY today if the price at 143.34 is tested twice consecutively when the MACD indicator is in the overbought area. This will limit the pair's upward potential and lead to a market reversal downward. A decrease to the opposite levels of 142.47 and 140.89 can be expected.
What's on the chart:
The thin green line – the entry price, where you can buy the trading instrument.
The thick green line – the presumed price, where you can set Take profit or fix profits yourself, as further growth above this level is unlikely.
The thin red line – the entry price, where you can sell the trading instrument.
The thick red line – the presumed price, where you can set Take profit or fix profits yourself, as further decline below this level is unlikely.
MACD indicator. When entering the market, it is important to be guided by the zones of overbought and oversold.
Important. For novice traders in the Forex market, it is necessary to be cautious when making market entry decisions. It is best to stay out of the market before major fundamental reports are released to avoid being caught in sharp fluctuations in the exchange rate. If you decide to trade during the release of news, always place stop orders to minimize losses. You can quickly lose your deposit without placing stop orders, especially if you do not use money management and trade in large volumes.
And remember, successful trading requires having a clear trading plan, such as the one I have presented above. Making spontaneous trading decisions based on the current market situation is a losing strategy for a day trader.
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